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Bitcoin and SA law

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With the rise in popularity of cryptocurrencies, and more particularly, Bitcoin, the question which isn’t immediately thought of by investors is: how do cryptocurrencies fit into your estate plan and have you accounted for them? KEZIA TALBOT, Legal Adviser, BDO Wealth Advisers sheds some light.

Whilst the Reserve Bank, in its Position Paper on cryptocurrencies, has determined that cryptocurrencies are not legal tender, this does not mean that the cryptocurrency which you own is not deemed to be an asset in your estate for all other purposes. Cryptocurrencies are, however, subject to the normal principles of income and capital gains tax, depending on the taxpayer’s intentions. Therefore, they will be treated as an asset in your estate for both executor’s fees and estate duty purposes, if your executor is even aware of the cryptocurrency which you own.

It would be tragic if, for instance, your entire estate comprised the ownership of several bitcoins, but your financial planner or attorney was not aware of this when assisting you with your estate planning and the drafting of your Will, and later on, when administering your estate, as this would result in your heirs receiving little to no inheritance, whilst your estate could be worth several hundreds of thousands of Rand.

Bearing in mind the anonymous nature of cryptocurrencies and the manner in which you hold ownership of the cryptocurrency, it would be virtually impossible for your executor to trace your holdings and properly account for them if they have not been brought to his or her attention. Furthermore, by not including your cryptocurrency in your estate plan, it will be likely that the liquidity calculations performed during estate planning will be inaccurate, thereby impacting on the estate administration process.

As the value of cryptocurrency, by its very nature, is volatile and not generally affected by the same events which affect traditional currencies, it will be difficult to calculate precisely what the effect on your estate will be, from a tax point of view. But this value should be assessed each time you meet with your financial planner, to determine the impact at that point.

So, how do you deal with cryptocurrency in your estate?

In order to understand this, it is necessary to go back to basics and understand how cryptocurrency transactions, and in this case, bitcoin transactions, work:

Satoshi Nakamoto, the creator/s of bitcoin, defines bitcoin as “a chain of digital signatures. Each owner transfers to the next by digitally signing a hash of the previous transaction and the public key of the next owner and adding these to the end of the coin. A payee can verify the signatures to verify the chain of ownership.”

Unlike traditional currencies, bitcoins do not exist in a physical form. Most bitcoin owners have bitcoin wallets, which reflect the value of your bitcoins.  In reality, however, the wallet contains the keys to your bitcoins.

As the keys are crucial for transferring ownership or spending your bitcoin, it is the keys which need to be protected and practically dealt with by your executor.

If a key is lost or no longer accessible, then, in essence, you will have lost your bitcoin.

The challenge, therefore, is to make your executor aware of your ownership of bitcoin and to ensure that he or she has access to the keys.

Without delving into the technical aspects of this discussion, a few options would be to: make a backup copy of your wallet and store same on an external hard drive, which your executor will know how to access, or ensure that you have transcribed the access details for the wallet in a separate document, addressed to your executor. Both the backup and/or the document setting out your access details for your wallet will need to be stored in a secure place, only identified to your spouse, executor or other trusted person, as these details are tantamount to your internet banking login details.

Lastly, it may be necessary to review your current Will or have a new Will drafted, in order to ensure that you have nominated an executor who would be comfortable dealing with these types of assets, and to ensure that your wishes regarding these and other assets, are correctly reflected.

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Kenya tool to help companies prepare for emergencies

After its team members survived last week’s Nairobi terror attack, Ushahidi decided to release a new preparedness tool for free, writes its CEO, NAT MANNING

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On Tuesday I woke up a bit before 7am in Berkeley, California where I live. I made some coffee and went over to my computer to start my work day. I checked my Slack and the news and quickly found out that there was an ongoing terrorist attack at 14 Riverside Complex in Nairobi, Kenya. The Ushahidi office is in Nairobi and about a third of our team is based there (the rest of us are spread across 10 other countries).

As I read the news, my heart plummeted, and I immediately asked the question, “is everyone on my team okay?”

Five years ago Al-Shabaab committed a similar attack at the Westgate Mall. We spent several tense hours figuring out if any of our team had been in the mall, and verifying that everyone was safe. We found out that one of our team member’s family was caught up in the attack. Luckily they made it out.

At Ushahidi we make software for crisis response, including tools to map disasters and election violence, and yet we felt helpless in the face of this attack. In the days following the Westgate attack, our team huddled and thought about what we could build that would help our team — and other teams — if we found ourselves in a similar situation to this attack again. We identified that when we first learned of the attack, nearly everyone at Ushahidi had spent that first precious few hours trying to answer the basic questions, “Is everyone okay?”, and if not, “Who needs help?” 

People had ad-hoc used multiple channels such as WhatsApp, called, emailed, or texted. We had done this for each person at Ushahidi (their job), in our families, and important people in our community. Our process was unorganised, inefficient, repetitive, and frustrating.

And from this problem we created TenFour, a check in tool that makes it easier for teams to reach one another during times of crisis. It is a simple application that lets people send a message to their team via SMS, Slack, Voice, email, and in-app, and get a response. It also works for educational institutions, companies with distributed staff, as well as part of neighbourhood networks like neighbourhood watches.

This week when I woke up to the news of the attack at Riverside, I immediately opened up the TenFour app.

Click here to read how Nat quickly confirmed the safety of his team.

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Kia multi-collision airbags

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The world’s first multi-collision airbag system has been unveiled by Hyundai Motor Group subsidiary KIA Motors, with the aim of improving airbag performance in multi-collision accidents.

Multi-collision accidents are those in which the primary impact is followed by collisions with secondary objects, such as other vehicles, trees, or electrical posts, which occur in three out of every 10 accidents. Current airbag systems do not offer secondary protection when the initial impact is insufficient to cause them to deploy. 

However, the multi-collision airbag system allows airbags to deploy effectively upon a secondary impact, by calibrating the status of the vehicle and the occupants.

The new technology detects occupants’ positions in the cabin following an initial collision. When occupants are forced into unusual positions, the effectiveness of existing safety technology may be compromised. Multi-collision airbag systems are designed to deploy even faster when initial safety systems may not be effective, providing additional safety when drivers and passengers are most vulnerable. By recalibrating the collision intensity required for deployment, the airbag system responds more promptly during the secondary impact, thereby improving the safety of multi-collision vehicle occupants.

“By improving airbag performance in multi-collision scenarios, we expect to significantly improve the safety of our drivers and passengers,” said Taesoo Chi, head of the Hyundai Motor Group’s Chassis Technology Centre. “We will continue our research on more diverse crash situations as part of our commitment to producing even safer vehicles that protect occupants and prevent injuries.”

According to statistics by the National Automotive Sampling System Crashworthiness Data System (NASS-CDS), an office of the National Highway Traffic Safety Administration (NHTSA) in USA, about 30% of 56,000 vehicle accidents from 2000 to 2012 in the North American region involved multi-collisions. The leading type of multi-collision accidents involved cars crossing over the centre line (30.8%), followed by collisions caused by a sudden stop at highway tollgates (13.5%), highway median strip collisions (8.0%), and sideswiping and collision with trees and electric poles (4.0%). 

These multi-collision scenarios were analysed in multilateral ways to improve airbag performance and precision in secondary collisions. Once commercialised, the system will be implemented in future new KIA vehicles. 

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